Persian Gulf Oil-Tanker Rates Decline Amid Demand Speculation

Charter rates for the largest oil
tankers on the industry’s benchmark trade route declined for a
second session amid speculation that demand to ship crude
cargoes declined.

Hire costs for very large crude carriers on the Saudi
Arabia-to-Japan voyage slipped 2 percent to 35.92 Worldscale
points, data from the London-based Baltic Exchange showed today.
Earnings fell about 4 percent to $19,000 a day for the
supertankers hauling 2 million barrels of Middle East oil to
Asia, according to Cowen Securities LLC, a New York-based
investment bank.

“Demand for eastern cargoes began to taper off later last
week,” Sam Margolin, an analyst at Cowen, said in an e-mailed
report today.

Rates gained earlier this month because of a “near term”
shortage of vessels, Arctic Securities ASA, an Oslo-based
investment bank, said in an e-mailed report today. The VLCC
fleet’s capacity will expand 5.1 percent this year, in line with
demand growth of 5.2 percent, according to data from Clarkson
Plc (CKN), the world’s biggest shipbroker.

The Worldscale system is a method for pricing freight costs
for oil cargoes on thousands of trade routes. Each individual
voyage’s flat rate, expressed in dollars a ton, is set once a
year. Today’s level means hire costs on the benchmark route are
35.92 percent of the nominal Worldscale rate for that voyage.

The Baltic Dirty Tanker Index, a broader measure of oil-
shipping costs that includes vessels smaller than VLCCs,
declined 0.3 percent to 675, the first loss in four sessions,
according to the exchange.